Correlation Between Alibaba Group and Bny Mellon

Can any of the company-specific risk be diversified away by investing in both Alibaba Group and Bny Mellon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alibaba Group and Bny Mellon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alibaba Group Holding and Bny Mellon Mid, you can compare the effects of market volatilities on Alibaba Group and Bny Mellon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alibaba Group with a short position of Bny Mellon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Bny Mellon.

Diversification Opportunities for Alibaba Group and Bny Mellon

0.21

Correlation Coefficient

Alibaba Group  Bny Mellon

Modest diversification

The 3 months correlation between Alibaba and Bny is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Bny Mellon Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bny Mellon Mid and Alibaba Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alibaba Group Holding are associated (or correlated) with Bny Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bny Mellon Mid has no effect on the direction of Alibaba Group i.e., Alibaba Group and Bny Mellon go up and down completely randomly.

Pair Corralation between Alibaba Group and Bny Mellon

Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Bny Mellon. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.25 times less risky than Bny Mellon. The stock trades about -0.22 of its potential returns per unit of risk. The Bny Mellon Mid is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  1,764  in Bny Mellon Mid on October 5, 2024 and sell it today you would lose (330.00) from holding Bny Mellon Mid or give up 18.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Alibaba Group Holding  vs.  Bny Mellon Mid

Alibaba Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bny Mellon Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bny Mellon Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Alibaba Group and Bny Mellon

The main advantage of trading using opposite Alibaba Group and Bny Mellon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group position performs unexpectedly, Bny Mellon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bny Mellon will offset losses from the drop in Bny Mellon's long position.

The idea behind Alibaba Group Holding and Bny Mellon Mid pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.